Recently, my state of South Carolina began pushing the notion of the FairTax in the statehouse, but I plan to share the truth of this consumption tax that will break the poor and middle class like never before.
Here's what is going on in my state:
A number of prominent Dems stepped to the podium to complain about a lack of representation, and the perceived strongarm tactics of the majority. There was also the fact that Act 388 was not addressed.
"You know what I find interesting, Mr. Smith? We spent all that time yesterday and we passed that amendment that said the study committee will study the FairTax, and bring information about the FairTax, as a part of its report," Rep. Gilda Cobb-Hunter said. "Well, you know, I’m not a big high-priced lawyer or big-time business person, but I have spent time trying to figure out how it makes sense to study the FairTax, which we do not have in this state, but it doesn’t make sense to study Act 388, which is wreaking havoc across this state, to all of the public schools we have."
She continued, "But, we can’t study Act 388. Perhaps because nobody wanting to study Act 388 is running for Congress. But, we do have people who are running for Congress who want to study the FairTax. And, maybe it’s just a coincidence that the whole notion of the FairTax is this No. 1 thing Club for Growth has, so maybe there’s a connection. I don’t know, I’m not the sharpest knife in the drawer. But, one wonders, Mr. Smith, if perhaps there is a connection between that and campaign contributions."
Rep. Rex Rice, who is running to fill U.S. Rep Gresham Barrett’s seat, introduced and got passed an amendment on the FairTax on Wednesday.
Now, let me share with you some truth on this FairTax crap:
Ever wonder why the FairTax is called the "Fair" tax? According to the various FairTax websites, it got it's name because a group of AFFT supporters voted for it. But why would a group supposedly dedicated to cutting taxes and eliminating the IRS choose a name like "fair tax?" If they honestly believed that there are no "fair" taxes but still picked that particular name then the name becomes an oxymoron like "genuine imitation" , "found missing", "good grief" , "pretty ugly" , or "Microsoft Works". It means that they lied.
However, we suspect that this well-funded effort used an advertising firm instead. AFFT actually copyrighted the name "FairTax" in the same way that Fox News copyrighted the term "Fair and Balanced". Then they went out and bought a slew of internet domain names that had the words "Fair" and "Tax". The object was to control the media and suppress other people from publishing a tax plan that used the words "fair" and "tax" in it. This makes the term euphemistic at best and doublespeak at worst.
When most people hear "Fair Tax" the first thing that comes to mind is doublespeak terminology like saying "downsizing" when you really meant "firing", or saying "persuasion" when you really meant torture. Terms like "peacekeeper missile" , "civilian casualties" and "death tax" come to mind. The FairTax is just a nicer term for what it really is: The Paris Hilton Tax Cut. It's secret goal is to empower idiots like Paris Hilton to continue collecting money for free, propagating, and passing on massive amounts of wealth and property tax-free from one idiot generation to the next without ever working for it or earning a dime of it.
At least people on government welfare programs have some degree of humility for getting something for nothing. We see them hang their heads low when they have to use food stamps to pay for groceries – it’s an embarrassment to get money you didn't work for. Not so with the heirs of millionaire estates. They hold their heads high in defiance as they spend their own welfare dollars. They actually think that they are entitled to money that they didn't work for and didn’t earn just because they were yanked out of the right crotch at birth.
America is about working for a living and building a better country. It’s not about leading a hedonistic, material life that you didn't earn. Self-made people build businesses, put people to work, provide goods, and help America. In contrast, freeloaders have no work ethic so they run for office instead, and change the laws in their favor. America would be better off if these "children" of self-made people started from scratch - a little hard work never killed anyone!
And here's more:
Progressive & Regressive taxes describe taxes; not morals or political opinion. In a progressive tax, the more you earn, the higher your tax rate. In a regressive tax, the less you earn, the higher your tax rate. The classical progressive tax is income tax. The classical regressive tax is sales tax. Progressive taxes generally favor the poor, regressive taxes generally favor the rich.
Disposable income is the amount of an individual's total income left after taxes. This income is available to be "disposed of" as either spending or saving.
Discretionary income is equal to disposable income minus the cost of the fixed expenses of life (such as rent/mortgage, food, car payments, insurance, etc.) This is what is left over after you pay all your bills.
The working poor have no discretionary income. They buy the cheapest products available and there is no latitude in quality of goods purchased or services used. They usually live paycheck to paycheck with no savings. They pay 100 percent of their income just to earn a basic living but they don't pay much in taxes. That isn't fair but that's life.
Middle class people have some disposable income. If they live very cheaply, buy used products, and save, they can save discretionary income. They can buy things they wanted rather than just what they needed (better quality, larger, more expensive goods and services). The middle class pays 80 to 100 percent of their incomes for necessities plus they pay a modest amount of taxes. That isn't fair but that's life.
Wealthy people usually have much more than they need, and most of what they want, and are not suffering any kind of financial burdens. While it is possible for a billionaire to spend all his income on food and shelter, the top one percent of rich people spend only 5 to 10 percent of their incomes on living expenses. This leaves 90 to 95 percent of their money free for whatever purpose they can think of. They also pay a higher amount of taxes. That's not fair but that's life.
The clever but dishonest presentations of the FairTax Book never tell the reader that there are two tax rates that the FairTax is proposing. Under the old income tax, your individual tax rate varied but covered everyone's income (100 percent) minus deductions. Under the FairTax we have two tax rates: 1. A sales tax rate of 30 percent for everyone. 2. An income tax rate that depends entirely on how much you consume.
The fact is that the FairTax is a huge burden for the working poor (who are much above poverty but living paycheck to paycheck). Because they are living paycheck to paycheck, they consume 100 percent of what they earn to survive and have no money left over for tax-free investments so they are literally in the 100% tax bracket. Because all of their earnings are used to pay bills (consumption) they are taxed by the FairTax at 100 percent. However the FairTax is a huge burden for the middle-class because they spend 80 percent of what they make in consumption (and have about 20 percent or less for tax-free investing), so they are literally in the 80 percent tax bracket. As you might have guessed, the FairTax is only a nuisance for the top one percent. Since they save and invest most of what they get, and can invest all of it tax-free under the FairTax, and also transfer wealth tax-free under the FairTax, they are literally in the 5% tax bracket.
Virtually all mainstream economists will tell you that consumption taxes are the most regressive taxes and hurt the working poor and the middle classes.
Notice that we didn't bring up the whole prebate thing. We are talking about what percentage of consumption is taxed, not individual dollar amounts. We are concerned with what percentage is left over and can be tax free. We are not going to distort this moment of clarity. The working poor, the middle class and the rich all get exactly $187 as a prebate so they all cancel each other out in this comparison. Maybe if we use dollar amounts and the prebate, this unfairness can be illustrated with sparkling clarity.
For more on this fraud, please visit the link.